TAKE ACTION FOR LOWER DRUG COSTS! HELP SPREAD THE WORD

Consumer Catalyst has launched a social media campaign to raise awareness about how sketchy ‘Pay-for-Delay’ deals hurt consumer health! Join the discussion on twitter and share your story, using the hashtag:

Stop the #RxRacket!

Pharmaceutical companies are colluding to keep drug prices high – and taking that money right out of your pocket.

Did you know drug companies have made more than 160 secret, back-room deals that

• Have kept 100 generic drugs or more off the market for years
• Drive up the cost of each drug by an average of $3,000 a year
• Keep all of our prescription costs high, while divvying up the spoils!

Right now, the Supreme Court is currently deliberating over whether these back-room deals are legal – but we know they’re wrong. Since 2005, as many as 142 different generic drugs have been unfairly kept from consumers, according to government reports. Delaying the launch of a generic drug lets the drug companies make bigger and bigger profits, while patients are stuck footing the bill, or going without the medicines they need.

The Supreme Court heard arguments by the drug companies, and fortunately Justices Kagan and Sotomayor raised consumer concerns – but the Court did not hear the perspective of the thousands of Americans unable to afford their medications. That’s because most people don’t even know that these deals are costing consumers thousands, and our health system billions of extra dollars, each year!

Help us raise awareness of this #RxRacket. The public deserves to know how this decision will affect us all – how thousands of Americans are being forced to choose between skipping their medications or going into credit card debt, just so that drug companies can make even more profit. Not to mention, how health care costs for everyone have gone up, because insurers pay most of these higher costs!

Whatever the Supreme Court decides, help spread the word, so we can help make sure that these deals come to an end, once and for all.

Target drugs: 
If you have taken Cipro, Provigil, or Androgel, you have definitely paid more because of a pay-for-delay settlement. And according to legal experts, it is very probable that many drugs including blockbuster drugs like Lipitor, Plavix and Nexium — have been delayed by pay-for-delay deals.*

We need you to tell everyone you know that this is happening, and help gather and share the stories of people you know that have been negatively impacted.

What you can do:

1. Read the stories shared by two women, Tanna and Karen, who were unable to afford their medications due to pay-for-delay deals that kept generic Provigil off the market for six years. Also, read how the companies’ legal arguments make no sense.
2. Share these posts on Twitter, using the hashtag #RxRacket, and ask others to share their stories too. And follow us at @postscriptrx.
3. Join our community on Facebook to keep up with the campaign and join our email list of impacted consumers by sharing your story.

You can find all the information you would ever need about this issue on our Pay-for-Delay info page. Please also feel free to add your thoughts on this #RxRacket in the comments, below.

Thank you for helping us protect your right to affordable medicine!

*The Full List – Drugs Likely to Have High Prices from ‘Pay-for-Delay’ Deals:
Adderall XR, Aggrenox, Altace, Arthrotec, Caduet, Carbatrol, Clarinex, Comtan, Duac, Effexor XR, Eloxatin, Ethyol, Femcon Fe, Fentora, Flomax, Lipitor, Lamictal, Levaquin, Lexapro, Loestrin-24 Fe, Loprox, Lotrel, Lybrel, Namenda, Naprelan, Nexium, Niaspan, Niravam, Olux, Opana ER, Ortho Tri Cyclen Lo, Oxytrol, Plavix, Propecia, Razadyne, Razadyne ER, Rythmol SR, Sinemet CR, Skelaxin, Solodyn, Stalevo, Tricor 145mg, Vanos, Vfend, Wellbutrin XL (150 mg), Xopenex, and Zantac!

Reposted from the Community Catalyst blog Health Policy Hub ….

As we discussed here last week, the U.S. Supreme Court is currently deliberating over whether pharmaceutical companies can collude to reap $3.5 billion a year in excess profits from American patients. Named FTC v. Actavis (and informally referred to as “The Androgel Case”), this case addresses whether it was legal for a brand name company to pay its generic competitor to delay generic Androgel from coming to the market. Why does this matter to you? Because the generic is up to 10 times cheaper than the brand name drug and Androgel is not the only brand name drug where a generic has been delayed. As Columbia University professor Scott Hemphill puts it, “[A] pay-for-delay settlement transfers wealth from consumers to drug makers, in the form of continued high pharmaceutical prices, with brand name firms sharing a portion of that transfer with the generic firm.”

The decision in this case would have far-reaching impact on the price of at least 140 different drugs whose costs have remained high because of such back-room deals. Since the Court heard oral arguments in the case last Monday, the Washington Post, Boston Globe, and smaller newspapers such as Sonoma County’s Press Democrat have all come out in agreement with us: these payments have to stop. Why?

The financial burden of monthly out-of-pocket drug costs has forced millions of Americans without drug coverage to cut back on taking their drugs or delay other health care. Even if you have insurance, co-pays for a brand name drug whose generics have been blocked can be a significant hardship—and your insurance company pays more, too. For example, the price of the drug Provigil skyrocketed from $300 a month in 2007 to over $1,000 per month in 2010 because in 2005 and 2006, Provigil’s manufacturer, Cephalon Corp. paid $136 million to four different generic drug companies to delay generic Provigil for 6 years—while Cephalon made more than $3 billion on U.S. sales of Provigil. In response, many insurers stopped covering the drug, forcing consumers onto Cephalon’s new drug “Nuvigil,”which many consumers reported to be less effective.

Meet two patients whose lives were turned upside down by the pay-for-delay deals that kept generic Provigil off the market:

Tanna

A state librarian in Fayetteville, MI, Tanna has been taking Provigil for more than ten years to treat idiopathic hypersomnia, a disease causing excessive sleep. Her son has narcolepsy, a related disease. When Tanna’s son first received his diagnosis, he was on Provigil as well, but Tanna’s insurance company forced them both to switch to Nuvigil. Neither of them could tolerate the drug and her son successfully switched to an ADHD drug for his symptoms, but Tanna has tried everything and Provigil is the only drug that works for her.

Much of Tanna’s suffering ended after she was diagnosed and prescribed Provigil. She has obtained her Master’s in Library Science and is able to work – as long as she takes her medicine.

While Tanna says Provigil has given her life back, its high price exacted a toll in return. Instead of decreasing with time, Tanna’s copay more than doubled from $35 a month in 2005 to $75 a month in 2009.

“If ten years ago, someone told me the percentage of my salary I’d be paying a month in health-related costs now, I’d say they were crazy,” Tanna said.” We’ve managed to pay our bills, but I have no savings, no safety net. We’ve done what families do – we’ve used credit cards. There’s no way I can ever think of retiring, but I always wanted to work, so I guess I’m getting my wish.”

While her doctor promised there would be a generic version of Provigil in2008, she has only seen the price reduced in the past three months (her copay is now down to $12 a month).

Tanna knows the Supreme Court decision will greatly affect everyone who relies on prescription drugs.

“If they [the drug companies] win this case then they can do whatever they want. Forever,” she said. “We’re screwed.”

Karen

Prior to Karen’s diagnosis with multiple sclerosis (MS), she barely took an aspirin. In the eight years since her diagnosis, Karen, a busy mother of three, has relied on Provigil. Unfortunately, while Provigil gives Karen the energy she needs to function, it is prohibitively expensive. A resident of Clarkston, MI, she served as a worker’s compensation administrator at a major automobile company until her MS forced her to stop working in 2005. When Karen stopped working, she had two mortgages and three young children. As she discussed with Ed Silverman on Pharmalot, between 2007 and 2010 the price Karen paid for Provigil more than doubled, from $7.26 a pill to $16.87 a pill (with her insurance company paying half). During this time, she was unable to afford her prescription in addition to her normal household expenses, either skipping doses or splitting pills to reduce costs.

In 2011, Karen had a major MS relapse. While crippled by fatigue, she was overwhelmed by the price of Provigil – she could not afford to continue paying for her medicine out-of-pocket, so she had to stop taking it, despite her doctor’s recommendation.

Since a generic version of the drug was released in October of last year, Karen has been able to take her full dose and pays only $16 every three months. The release of generic Provigil and its lower cost has enabled Karen to lead an active life, spending more time with her family, volunteering at church and even hosting a Japanese exchange student.

The Rest of Us

Tanna and Karen are not alone – if you’ve paid for Androgel, Augmentin, BuSpar, Cardizem, Cipro, K-Dur, Nolvadex (tamoxifen), or Provigil, it is almost certain you’ve paid too much because of pay-for-delay deals based on records from the FTC and other lawsuits. Legal scholars and experts also suspect (the documents are secret) that pay-for-delay agreements have delayed generic versions of nearly fifty more drugs, including Lipitor, Plavix, Nexium, Zantac, Effexor XR, Lamictal Cipro, Adderall XR*, Wellbutrin XL (150 mg), Provigil*, Altace, Niaspan, Nolvadex (tamoxifen), Caduet, Zantac and many others (see full list in box).

If you have paid for one of these drugs in the last few years, you too might have been fleeced by a pay-for-delay agreement that kept a generic off the market. Please share your story with us, like Tanna and Karen did, and join them in the fight to stop these unfair deals, once and for all.

Khadijah M. Britton, JD, Program and Policy Associate

The last year has been a roller coaster-ride of both successes and set-backs in the fight to eliminate pay-for delay settlements. These multi-million dollar sweetheart deals have been used more and more by brand-named drug makers to get their generic competitors to agree to delay bringing affordable generics to the market.

A bill to ban these agreements was included in the House’s health care reform proposal last fall, and a similar measure was supported by the White House and considered by the Senate. Unfortunately, the Senate’s procedural and jurisdictional rules kept the measure from being included in the national health reform bill enacted in March.

Undeterred, leaders in the House then included the measure in an appropriations bill approved on July 1^st. But the Senate passed one appropriations bill on July 22 without the provision. In the aftermath of this setback, consumer champion Senator Herb Kohl (D-WI) and others succeeded in including this vital reform as an amendment to the FTC’s budget authorization. Kohl and others then  overcame the next major hurdle yesterday, narrowly stopping  drug industry lobbyist efforts to strip the measure in the Senate Appropriations Committee.

Yesterday’s vote was a dramatic one.  Senator Arlen Specter (D-PA) introduced an amendment to remove the pay-for-delay provision from the Committee bill. When four Democrats voted with Specter  to strip away the pay-for-delay provision, the AP reports that:

“Drug company lobbyists in the audience thought they had the vote won, provided they could win over every panel Republican. But Sen. Richard Shelby, R-Ala., voted against the drug companies, helping give Kohl and Durbin [the author of the Appropriations Bill] a surprise win.”

Recent settlements shielding $9 Billion in drug spending from generic competition

The Federal Trade Commission (FTC), which has consistently challenged these anti-competitive agreements in the courts and through testimonies before Congress, called yesterday’s vote a significant victory. FTC chairman Jon Leibowitz testified before Congress earlier this week that these types of pay-for-delay agreements, which delay the entry of generic drugs, are becoming more common (see graph). Legal decisions permitting these agreements have led to their proliferation from none in 2004 to a former high of 19 such agreements in 2009. The FTC notes that in just the first 9 months, the number of pay-for-delay settlements in fiscal year 2010 has already topped last year’s record high.

Graph: Federal Trade Commission

The FTC’s preliminary analysis of the agreement filed this fiscal year concludes that 21 pay-for-delay agreements entered into this year are protecting $9 billion in prescription drug sales from generic competition. Combined with the earlier agreements in effect, this could mean that as much as $29 billion in annual spending on drugs are improperly shielded from generic challengers.  That is a significant loss of possible savings.  The FTC estimates (conservatively, in our opinion) that these settlements are costing consumers and our health system at least $3.5 billion a year.

FTC has continued to raise the alarm about these settlements, and their effect upon consumers. In a press release coinciding with testimony before Congress, FTC Chairman Jon Leibowitz summed it up:

“That’s almost an epidemic,” Chairman Leibowitz said, “and left untreated, these types of settlements will continue to insulate more and more drugs from competition. Every single FTC Commissioner, going back through the Bush and Clinton administrations, has supported stopping these unconscionable agreements.”

On the legal front, PAL continues to support efforts to do away will these settlements. PAL and AFSCME District Council 37 filed an amicus brief in May in support of the Second Circuit’s reconsideration of the legality of these agreements in the Cipro litigation. And the PAL-member lawsuit challenging the pay-for-delay settlements concerning Provigil continues.

FTC Chairman Leibowitz testified that some of these recent events, such as the Second Circuits Cipro decision and the fact that the House has already passed a ban on these settlements, gives him “reason to believe that the tide may be turning, both in the courts and in Congress.” Yet, Chairman Leibowitz wisely cautioned that bringing about such a reform through the Courts will take time, which means that  “legislation would be the most effective way to stop these deals.”

Thus the successful Senate Committee vote yesterday “means that consumers are one step closer to saving billions on their prescription drugs” according to Leibowitz.  And help can’t come too soon.  The bill’s Senate sponsor, Senator Herb Kohl, points out why:

“The cost of brand-named drugs rose nearly ten percent last year. In contrast, the cost of generic drugs fell by nearly ten percent. At this time of spiraling health care costs, we cannot turn a blind eye to these anticompetitive backroom deals that deny consumers access to affordable generic drugs.”

We view yesterday’s decision as a crucial step  to put legislation in place to end these agreements and foster consumer access to affordable generic drugs.

This week, the White House unveiled several policy proposals that it would like to see included in national Health Care reform.  See white house proposals here. Significantly, the White House strengthened the Senate’s earlier health reform bill by including a number of prescription drug provisions, including:

- an immediate $250 rebate for seniors that enter the ‘donut hole’ along with a plan to close the donut hole completely by 2020. The proposal notes that “Over 8 million seniors hit this gap in Medicare coverage, and for those who do not have other coverage, average drug costs are $340 per month, or $4,080 per year.”

- a provision giving FTC the authority to challenge ‘pay-for-delay’ or reverse-payment settlements that keep generic drugs off the market.  This reform is estimated to save $35 billion over the next decade, while making generic forms of some drugs more readily available. 

Even before these White House proposal were announced, the bill passed by the Senate and pending before the House included several significant reforms concerning prescription drugs, including:

- the expansion of prescription drug coverage to some 30 million newly covered people.

 - a reform to promote needed transparency and reduce doctor’s potential conflicts of interest, through the “full transparency [of] all drug companies, device, and medical supply manufacturers . . . gifts . . . or financial arrangements” with doctors. This proposal follows the current reform in the Senate bill.

- a transparency provision to require all pharmacy benefit managers (PBMs) under Medicare or the exchange to report “information regarding any rebates, discounts, or price concessions they negotiate for prescription drugs” to help health plans reduce waste and losses caused by PBMs. And health plans would also be told how often available generic drugs are used.”

- a 50% discount off branded drugs for seniors in the donut hole.

- billions of dollars in fees on drugs and devices to help pay for this historic expansion of coverage.

Pay-for-delay legislation needed now more than ever.

Also this week, a Court dismissed an FTC and consumer challenge to the legality of a pay-for-delay settlement concerning the drug Androgel. The Court dismissed the FTC’s complaint asserting that the agreement was anti-competitive, despite the fact that the generic competitor.

An article in Today’s BNA Pharmaceutical Law and Industry Report describes the decision, including the efforts by drum maker Solvay to transfer the case from California’s Ninth Circuit, to the less-favorable 11^th Circuit. The result of the case, following the precedent set in the 11^th Circuit in Shering-Plough, is not as surprising. But comments by the Generic Pharmaceutical Association’s were. This group asserted that the FTC’s loss somehow demonstrates that the FTC’s existing authority “adequately protects consumers” and that new legislation would be “anti-consumer.”

How you can help:

Keep fighting the good fight

Yesterday’s White House summit illustrated how economic hard times and continuing insurance industry abuses leave consumers without protection without comprehensive reform.  (You can see highlight from CNN here, and Community Catalyst’s take on it here.) 

Advocates need to continue to make the case for comprehensive reform.  You can help by signing this online petition that is being sponsored by the American Cancer Society/ Cancer Action Network, Community Catalyst, and many other national organizations: www.healthcarepetition.org/10707_communitycatalyst

This past Tuesday, PhRMA was before Congress.  Not  lobbying to block price negotiations or generic competitors, but attending a hearing in their honor (click here for details of the hearing).  Chairman Henry Waxman, of the House Energy and Commerce Committee, has called upon PhRMA to explain their recent price increases exposed by AARP  mid-November in its Rx Watchdog Report.

At Tuesday’s hearing, Rep. Waxman put the price increase in perspective. He said:

Our nation is trying to recover from the largest economic downturn since the Great Depression. The Consumer Price Index has actually dropped over the last year. Social Security checks will remain stagnant. Millions of Americans have lost their jobs and their health insurance.

Yet, the brand-name prescription drug industry raised prices by more than 9% over the last year.

Rep. Waxman also noted that the health reform bill passed by the House last month will both provide insurance coverage to “36 million citizens who would otherwise be without it” but he cautioned legislators must not “write the pharmaceutical industry a blank check as we reform the health care system.”

Rep. Waxman also praised the approach under the House bill:

The House health care reform bill strikes an important balance that puts consumers and taxpayers first. In return for the billions of dollars in new market opportunities, we require that the drug industry provide additional discounts for the Medicaid program. And we end the multi-billion dollar windfall that the industry received when dual-eligible enrollees were switched from Medicaid to Medicare Part D drug coverage.

The House bill uses the money raised from these industry concessions to help millions of Americans afford health care coverage and to close the Part D donut hole.

At the hearing, Kathleen Stoll, Deputy Executive Director, Director of Health Policy at Families USA, testified that:  “In recent years, Americans have spent a significantly larger amount on prescription drugs. In fact, total spending on prescription drugs in the United States nearly doubled between 2000 and 2007, rising from $120.6 billion to $227.5 billion.”

Ms. Stoll praised the House health care reform bill, noting that it would improve access to prescription drugs by requiring coverage for drugs in all health plans sold in the individual market, and by eliminating annual and lifetime caps on benefits, and capping out-of-pocket costs.

The  chair of the board of AARP, Bonnie Cramer, also testified about the effect of rising drug prices on AARP members, seniors, and other consumers. She noted the costly impact of rising drug prices on government spending for subsidized seniors under Medicare Part D, and for seniors or others on Medicare Part B.  Her testimony noted that the specialty, or biologic drugs covered under Part B are the biggest current drug cost.  for the program’s entire $17 billion spend on drugs in 2007.

The top six biologics represented $7 billion of the total [$17 billion in Part B drug costs in 2007], or 43 percent of all Part B drug spending. To put this in context, Medicare Part B spending for one biologic drug – Epoetin alfa – in 2007 ($2.6 billion) was greater than FDA’s , with over 10,000 employees, entire FY2008 budget (2.3 billion).

Ms. Cramer also voiced concerns for the “millions of Americans … that fall into the donut hole each year.” And she noted that the number of part D plans charging 33% co-insurance for the very high priced specialty drugs has risen from only four of the nearly national plans to “more than half” of the Part D plans today.  This means that drug price increases are felt directly by the patient. Ms. Cramer put this in perspective as follows:

… rheumatoid arthritis medicines such as Enbrel and Humira averaged $1,633 per prescription in 2008. The average cost of a multiple sclerosis drug was $2,006. At 33 percent coinsurance, enrollees cost would exceed $500 per prescription. Most patients with either of these conditions filled at least eight such prescriptions in 2008.

The AARP report revealed the shocking price increase of 9.3 % for brand-name drugs, 10.3% for specialty drugs.  This is contrasted to the 7.8% decrease in the price of generic drugs during the same 12-month period ending September 30, 2009.  The report notes that all but one of the top 25 selling brand name drugs used by Medicare Part D plans rose from between 4.8% and 19.7%, and all but two of the top 25 specialty drugs also rose in cost, some by as much as 28.2%. Ten of these best-selling specialty drugs rose by more than 12%. This is happening at a time when the economic recession had driven the prices of most other goods and services down.

The New York Times covered the reports release, and noted that  the drug industry’s own major consulting firm, IMS Health, reversed their earlier market prediction of a 1% declines in sales for 2009, and now predicts a 4.5% growth in drug sales.  This means $21 billion in added drug costs in 2009, a windfall profit for the industry as the rest of the country grapples with record unemployment and ongoing recession.

Impacts of the price increase:
The new price increases have reversed the trend and produced two results — an immediate profit increase for 2009-2010; and a significantly higher base price for their future revenues once the approximately 30 million newly insured customers are added through the passage of health reform.  Drug companies set the price for the drugs they sell, and can raise or lower them at any time.  Additionally, the companies offer rebates and other discounts based on their price to different insurers, state Medicaid agencies and federal agencies.  The higher the base price, the more leverage for the drug company in negotiating with purchasers.  The result of this market manipulation is an approximately $120 Billion profit.

PhRMA appears to have gone back on their deal by changing the prices so radically and shifting an $80 Billion loss into a $120 Billion profit-grab.  PhRMA has been one of the most vocal supporters of health reform—they should be given that they have literally billions to gain if the law passes.  Drug industry  ads in support of reform, rather than in opposition, have been a welcomed on Capitol hill.  But the good will PhRMA generated supporting reform may have been    shaken by the recent price increase.

This profiteering has caught the attention of Congress.  The House Energy and Commerce’s subcommittee on Health is investigating this price increase, presumably with an eye towards strengthening the drug cost containment measures in the health reform bill.  Up until now, many drug cost containment initiatives have been off-limits due to the ‘PhRMA deal’.  PhRMA made a deal with President Obama and some Congressional leaders last Spring that was to  provide $80 billion in drug savings over the next 10 years, mainly through discounts to brand name drugs in the Medicare D doughnut hole..  In exchange, they would support health reform.  One of the biggest potential areas for savings that was declared off-limits by industry is the ability for Medicare to negotiate drug prices.

Even Senator Baucus, who chairs the Senate Finance Committee, and brokered the deal with Pharma on behalf of the Senate, has said that the total amount in future saving legislators will require from Pharma is “still in discussion.”

Tuesday’s Congressional hearings may help influence the current Senate debate, and the negotiations in the conference process (which would reconcile the differences between the legislation passed by the House and any future Senate bill.) We hope our Congressional leaders will see the stark reality exposed by the AARP Watchdog Report – that Pharma’s control of drug prices makes their proffered discounts illusory and holds us all hostage to their profiteering.

Medical Device Safety Act would restore needed safeguards and allow victims to be compensated

When 2 ½ year old Avery DeGroh’s defibrillator shocked her nine times because of a broken lead, her mother “grabbed her to hug her, and…could feel all the electricity jolting back and forth, cycling through her body.” (Details here.) The defibrillator lead was soon recalled by manufacturer Medtronic, but the DeGroh family was still stuck with $30,000 in medical bills for the cost of replacing the device, not to mention the trauma of Avery’s experience. DeGroh’s mother explains that “as the law stands, we don’t have any way to seek compensation for what Avery has gone through…we were just asking for her hospital bills [to be paid].”

The DeGroh family and others testified before the Senate’s Committee on Health, Education, Labor, and Pensions on August 4 in support of the Medical Device Safety Act (MDSA), which will restore an injured patient’s right to sue manufacturers.

Without a change in the law, medical device manufacturers will continue to enjoy complete immunity from liability under the Supreme Court’s 2008 Reigel v Medtronic decision. This is true even if a defectively designed or manufactured medical device injures or even kills patients.

The MDSA, sponsored by Sen. Edward Kennedy (D-MA) and by Rep. Frank Pallone (D-NJ) and House Energy and Commerce Committee Chairman Henry Waxman (D-CA), would restore the right to seek justice in state courts for patients who are injured by faulty medical devices. MDSA (designated H.R. 1346 in the House and S. 540 in the Senate) would simply overturn the 2008 Supreme Court decision which found that a 1976 federal statute allowing FDA to regulate and approve the marketing and sale of medical devices also broadly preempts state authority, including those state laws that allow injured consumer to sue a manufacturer.

At the hearing, Dr. William Maisel, Director of the Medical Device Safety Institute at Beth Israel Deaconess Medical Center, testified that while “we are fortunate to have the preeminent medical regulatory system in the world,” the FDA must regulate “more than 100,000 different medical devices manufactured by more than 15,000 companies.” After approval, the FDA must rely on manufacturers to report problems because they simply do not have the resources to adequately monitor all of the devices on the market.

Before Riegel, lawsuits were the main incentive for device companies to report problems. But in light of the Riegel decision, manufacturers have little, if any incentive to report problems, because to do so might decrease sales. In short, now that consumers cannot sue, there is very little incentive for manufacturers to act responsibly and inform FDA as soon as they have evidence of public health risks associated with their devices.

Bill cosponsor Senator Harkin described the ability to sue manufacturers as an important “safety net” that is complementary to FDA regulation. “In our system of justice, access to the court system is critical in exposing dangers and bringing about remedies.” (Watch the hearing here.) Another victim of Medtronic’s defective defibrillator lead, Nick Evola, was shocked 43 times. According to his lawyer Wendy Fleishman, “Medtronic put profits ahead of patient safety. They were aware the device was failing at abnormally high rates but continued to market it as alleged in lawsuits filed against the company.” (See article here.)

The profits on medical devices are significant. In 2008, Medtronic’s revenue topped $13 billion, with $10 billion in profits, according to the American Association for Justice, an advocacy group supporting the MDSA.

In support of the bill, Dr. Maisel cautioned that “the Riegel decision eliminates an important consumer safeguard – the threat of manufacturer liability – and will lead to less safe medical devices and an increased number of patient injuries.”

Senator Harkin explained at the hearing that “this bill is really about real people, who have been…let down, sometimes catastrophically. Right now they have no access to justice and no ability to hold those that cause them harm accountable.”

Janice Baird, another supporter of the bill whose son died due to a defective pacemaker, explained that the law is needed because manufacturers “have to be responsible, and [because the law] will also, in my heart, give me some peace to know that Robert’s death was not in vain.” (See article here.)

More information can be found in our Fact Sheet on the MDSA, or at the website stopcorporateimmunity.org.

Today’s New York Times reports that PHARMA has finally staked out their agenda in health care reform – avoiding cost controls, and keeping generics off the market.

An undisclosed deal announced this past Sunday between the drug industry, Sen. Baucus, and the Obama administration would help pay as much as half the cost of brand name drugs for seniors in the costly ‘donut hole’ under Medicare. (Currently, a Prescription Drug Plan regulated under Medicare Part D pays three fourths of the first $2,700 in yearly prescription costs, but then stops at the ‘donut hole.’ This forces the consumer to pay all of the next $3,454 in costs out of pocket. Medicare Part D coverage starts back up when the drug costs exceed $6,100.)

Due in part to the continually rising costs of prescription drugs, a fourth of Medicare beneficiaries hit their donut hole. One out of seven of the seniors who hit the donut hole then stop taking their medications due to cost.

A White House spokesperson notes that the deal would save these elderly consumers $30 billion over the next 10 years, but that an additional $50 billion would go to the federal government over the next decade, possibly in the form of rebates to Medicaid or other federal programs purchasing drugs.

While proposals to control or reduce drug costs are needed, our experience with drug pricing fraud by the drug industry teaches us that reliable and transparent price benchmarks are needed to keep this proposal from being a sham. For instance, a nationwide class action lawsuit by PAL members revealed that drug wholesaler McKesson Corp. manipulated reported prices that were used as reimbursement benchmarks, which cost Medicaid, private insurers, and consumers over $7 billion from 2001 to 2005. Another PAL class action lawsuit revealed that over 13 of the largest drug manufacturers engaged in a scheme between 1991 and 2004 to inflate their reported reimbursement prices on doctor-administered drugs, costing Medicare part B, insurers, and consumers billions of dollars.

Finally, a government report from 2006 showed that even when the federal government negotiates contracts with drug makers that guarantee federally funded community health centers the best possible price, the drug industry failed to comply with the contracts, costing hundreds of millions of dollars each month, and possibly billions of dollars a year. In this case, lax monitoring and enforcement by HHS left community health centers and other front-line government programs with little recourse.

These lawsuits and other lessons illustrate the need for full transparency, to allow consumers advocates to monitor progress, and ensure that Medicare consumers truly benefit from this proposal.

In addition to heading off cost controls, the other prong of the drug industry’s agenda is to shoulder aside their generic competitors. As pointed out in today’s Wall Street Journal, this ‘discount program’ may actually discourage seniors on Medicare from switching to less expensive generic drugs.

PHARMA has also come out against legislation that would prevent brand name drug companies from paying their generic rivals to delay bringing new generics to the market. These “pay-for-delay” settlements have become common since 2005, and have cost consumers and insurers an estimated $12 billion a year in lost savings.

For instance, the current class action lawsuit by PAL member AFSCME District Council 37 has challenged multiple settlements between Cephalon Corp. and generic manufacturers Teva, Barr, Mylan, and Ranbaxy. These settlements, totaling up to $136 million dollars, have stopped all four of these generic companies from bringing a generic version of the drug Provigil to the market.

The House version of the bill to prevent “pay-for-delay” settlements, HR 1706, passed an important hurdle on June 3rd, when it was approved by the House Subcommittee on Commerce, Trade, and Consumer Protection, and sent to the full Committee on Energy and Commerce. The NY Times reports that the Senate version of the bill, S. 369, is poised for a vote this week.

The Times article noted that President Obama’s budget criticized these settlements as “anticompetitive agreements” that keep generic drugs off the market. The FTC, which continues to challenge the anti-competitive nature of these settlements in court, sees consumers being harmed. FTC chairman Jon Leibowitz said that allowing these settlements to continue would cost consumers tens of billions of dollars in the next decade. According to the Times, Mr. Leibowitz cautioned that

“Drug companies are lobbying furiously against the legislation because they want to preserve their monopoly profits at the expense of consumers.”

The Times article also made clear that Pharma has launched their own dis-information campaign on the bills. Pharma made the outrageous claims that these anti-competitive agreements benefitted consumers because they “avoided litigation and allowed generic drugs to enter the market before drug patents expired.”

However, in case after case (K-Dur, Tamoxifen, Cipro) these settlements have prevented generic versions of brand name drugs from becoming available to consumers. How?

These settlements, often for many millions of dollars, allow brand name companies to ‘buy-off’ their generic competitors with multi-million dollar payments that are far in excess of the profit margin on a new generic drug. This lets the brand name drug continue its exclusive sales, guaranteeing them hundreds of millions, if not billions of dollars free from competition.

These “pay-for-delay” settlements are likely to arise in current litigation on the validity of patents for the drugs OxyContin, Protonix. and Wellbutrin.

You can help. Please contact your Congressperson or Senator, and urge them to support HR. 1706/S. 369. If you are part of an organization, please contact us to sign on to a letter of support of these bills.

Bill would ban the reverse payment settlements that are keeping new generics off the market!

Yesterday, a bill to ban the “pay-for-delay” settlements between brand-name drug companies and their generic competitors cleared its first legislative hurdle.

The House Subcommittee on Commerce, Trade, and Consumer Protection reported H.R. 1706, the “Protecting Consumer Access to Generic Drugs Act of 2009” out of subcommittee, sending it the House Committee on Energy and Commerce.

If passed, H.R. 1706 would ban the “pay-for-delay” settlements between brand name drug makers and generic drug makers that postpone the entry of generic drugs on the market. The measure has the potential to make a huge difference to consumers currently unable to afford their brand-name prescription drugs. Generic drugs usually cost 80-90% less than the equivalent brand name drug. During a hearing when the bill was introduced just over two months ago, testimony before the subcommittee suggested that these settlements have cost consumers about $12 billion per year since they became common in approximately 2005. [FN1] This is supported by an FTC estimate that early market entry of the generic form of only four brand name drugs (Zantac, Prozac, Taxol, and Platinol) has saved consumers and providers over $9 billion in health care costs. [FN2]

These settlements arise in part due to the laws governing the early entry of generic drugs to the market. Under current law (the Hatch-Waxman Act) the generic drug maker may apply to the FDA for approval to market and sell a generic version of a brand name drug if they feel the drug’s patent is invalid. The brand name drug maker nearly always responds by suing the generic company for patent infringement.

Since approximately 2005, brand name drug companies have been settling these patent disputes by buying-off the generic companies with multi-million dollar settlements. (See our cases on Provigil, Oxycontin, Cipro, Tamoxifen, and K-Dur.)

Current PAL member lawsuits on Provigil and Oxycontin are challenging these ‘pay-for-delay” settlements, and other PAL member lawsuits on Protonix and Wellbutrin will likely result in such a settlement. Past PAL-member lawsuits have lost challenges to these settlements in two of the three federal circuit courts to address the issue (K-Dur in the 11th Circuit and Tamoxifen in the 2nd Circuit) while only the 6th Circuit (in a non-PAL lawsuit, In re Cardizem CD Antitrust Litig., 332 F.3d 896, 908 (6th Cir. 2003)) and the FTC continue to reject these settlements as anti-competitive. H.R. 1706 would ultimately resolve the mixed results encountered by lawsuits.

H.R. 1706 would deem any payment between a brand name drug maker and a generic manufacturer to settle a patent infringement dispute to be an unfair and deceptive practice, and an unfair method of competition under the Section 5 of the FTC Act (15 USC § 45).

These “pay-for-delay” settlements also allow a loophole under the Hatch-Waxman Act to prevent any other generic manufacturer from subsequently applying to bring that generic drug to market until 6 months after the first generic company has done so. Therefore, if a brand name drug maker pays off the first generic company, which holds this 6 month period of exclusivity, no other generic company can bring that same generic to the market until after the original patent expires. For these reasons, these settlement agreements are highly anti-competitive and harmful to consumers.

The bill al (more…)

In December 2003, Abbott Laboratories (NYSE: ABT) decided to increase the price of its HIV/AIDS drug Norvir (ritonavir) by 400%. PAL member Service Employees International Union Health & Welfare Fund filed a class action lawsuit against Abbott in October 2004, alleging that the price increase violated the antitrust laws.

Norvir is a “protease inhibitor” (PI) that is commonly used as part of AIDS “drug cocktails” (combinations of prescription drugs working together). Norvir is very important because it “boosts” the effects of other PIs taken by HIV/AIDS patients. Abbott, by increasing the cost of Norvir by 400%, effectively forced HIV/AIDS patients to pay significantly more for their life-saving drug regimens. (The Wall Street Journal did an excellent story in Jan. 2007 laying out the history of the price increase, “Inside Abbott’s tactics to protect AIDS drug“)

Abbott faced a firestorm of criticism for this outrageous price increase — there were shareholder resolutions, protests at Abbott headquarters, a boycott by hundreds of physicians, Attorney General investigations, numerous newspaper editorials lambasting the move, etc. But Abbott refused to even consider reducing the price. The only significant challenge to Abbott’s conduct is the lawsuit brought by SEIU Health and Welfare Fund and two patients.

The lawsuit has overcome significant hurdles (the Court denied Abbott’s motion to dismiss and motion for Summary Judgment, and certified the case as a class action), and the trial is scheduled to begin this summer. Abbott has again filed a motion for Summary Judgment. Such motions are filed with the Court after the parties have completed discovery (exchange of documents, depositions of witnesses and experts) but before the trial. Abbott is essentially asking the Judge to rule in its favor, arguing that based on the evidence, there’s no way a reasonable jury could find in favor of the plaintiffs.

Both Abbott and the plaintiffs have filed numerous documents with their Summary Judgment motions, and now Abbott is asking the Court to “seal” many of those documents, i.e. make them not available to the public. The motions and papers concerning Abbott’s request are here, here and here.

Why does Abbott want to keep these documents a secret and out of public view?

One of Abbott’s lawyers submitted a declaration to the Court giving the reasons:

“5. It is my understanding that the portions that have been redacted reflect, in general, Abbott’s strategic thinking and views related to pricing, public relations, marketing, research and development, market positioning, promotional activities, market segmentation, strategic brainstorming, long-range planning, sales, and lifecycle management of its pharmaceutical products that are not shared with the public or widely disseminated even within Abbott. It is my understanding that this information is kept in the highest confidence even within Abbott and is not intended to be disseminated to the general public or Abbott’s competitors.”

It seems to me that “Abbott’s strategic thinking and views related to pricing, public relations, marketing, research and development, market positioning, promotional activities, market segmentation,” etc are all of great public interest, particularly given that they concern a drug that is essential to fighting the significant public health crisis that is HIV/AIDS.

The fact that such information “is not intended to be disseminated to the general public” of course doesn’t mean that it shouldn’t be. In fact, it may even be all the more reason it should be. In fact, the plaintiffs quoted a Court opinion from an unrelated case in their original filing on this issue:

“Indeed, common sense tells us that the greater the motivation a corporation has to shield its operations, the greater the public’s need to know.” [In re Lifescan, Inc. Consumer Litigation, No. C 98 20321 JF, 1999 U.S. Dist. LEXIS 9894, at ** 7-8 (N.D. Cal. June 23, 1999)]

But let’s read on…

“6. In addition, it is my understanding that many of the Exhibits, from which these redactions are made, contain information that could be confusing, misleading, or incomplete if taken out of context or without the proper background information. Therefore, some of the information redacted, in addition to being competitively sensitive, could be used to mislead the public and be perceived in a way that was never intended by the author or the deponent. Public dissemination of this information could substantially harm Abbott’s good will, standing, and relationships that it has created with the HIV/AIDS community.” [emphasis mine]

Of course, one has to ask, what good will, standing, and relationships with the HIV/AIDS community is Abbott talking about? Abbott managed to alienate virtually the entire HIV/AIDS community by raising Norvir’s price, and then further by threatening to withhold all new medicines from Thailand if Thailand’s government issued a compulsory license for the HIV/AIDS drug Kaletra (a pill that, incidentally contains Norvir, and which the Norvir price hike was intended to increase US sales of). [A compulsory license would have allowed Thailand to break the patent on Kaletra in Thailand and import a less costly generic version]

And how could Abbott think that trying to keep these documents from public view would improve its relationship with the HIV/AIDS community? It’s likely that many of the documents would just rehash what’s already publicly known about Abbott’s reprehensible price increase. Sometimes trying to keep documents secret does more harm to a company’s reputation than the documents themselves would have. Nothing arouses suspicion more than the question “What are they trying to hide?” So Abbott may have, as the expression goes, cut off its nose to spite its face with this move.

Abbott’s attorney then goes on to give “justifications” for why particular Exhibits should be sealed, all beginning with the phrase “It is my understanding that…”

The lawyers for SEIU and the class filed a response to Abbott’s attorneys arguments, which is here. They point out that:

• To have documents sealed, Abbott has to “overcome a strong presumption of access by showing that ‘compelling reasons supported by specific factual findings . . . outweigh the general history of access and the public policies favoring disclosure.’” Pintos v. Pac. Creditors Ass’n, 504 F.3d 792, 802 (9th Cir. 2007).
• “The declaration Abbott has filed in support of its sealing request… fails to satisfy Abbott’s burden…[T]he declaration is not based on the personal knowledge of Abbott’s counsel…For the most part, the declaration merely asserts [Abbott's counsel's] “understanding” of the general subject matter of the redacted portions of the documents Abbott proposes that the Court permanently seal, and presents no actual evidence.”
• The “Declaration offers little in the way of facts; rather, it is replete with unsubstantiated, conclusory statements and hypothetical assertions, as well as argument… Abbott has not even attempted to make the sort of particularized showing mandated by the applicable standards.
• And finally, “much of the information in the documents has already been made public, the documents are mostly four to six years old and therefore especially undeserving of being shielded and there is a particularly strong interest here in allowing public access to the materials at issue given that the subject matter of the litigation ‘involves matters of significant public concern.’”

So we ask you, dear readers, what do you think? Did Abbott do more harm than good in trying to seal these documents? Post your thoughts in the comments.

To receive udpates about the Norvir case, fill out the form located here.

For information about the Norvir case, including copies of court documents, go here.

CNNMoney.com reported yesterday this little nugget:

“Prescription drug sales rate hits 47 year low”

Which suggests that drug sales were lower in 2007 than in the past 47 years, right?

Wrong.

Drug sales did NOT decrease in 2007. In fact, far from it. According to the IMS Health report that the article describes, prescription drug sales grew by 3.8% in 2007.

So why the confusing headline? Because the IMS report says that the rate of growth slowed in 2007. In other words, sales grew, but not as fast as in past years – in 2006, sales grew by 8%.

“Growing but not as fast” is very different from “Declining,” yet all too often media reports conflate the two. A slowing growth rate may foretell a trend that might eventually turn into an actual decline, but that can’t be assumed.

The Associated Press ran a similar headline, although not as confusing:
“US Prescription Drug Sales Growth Slows”

That’s better but still confusing to the average reader.

What would be a better headline?

Here’s my suggestion:
“Drug sales grew in 2007, but slower.”

Do you have one to propose? Post it in the comments.

By the way, we in the U.S. are now paying more than a quarter of a trillion dollars a year on prescription drugs – $286.5 billion a year, to be exact. Are we getting our money’s worth?

And in closing, why, according to IMS, did this slowdown-in-the-rate-of growth take place?

• Loss of exclusivity – Branded drugs representing $17 billion in sales lost exclusivity in 2007, helping to drive prescription volume growth of 10 percent for unbranded generics. In 2007, generics continued to replace branded prescriptions in the major therapeutic classes, increasing their share of total dispensed prescriptions to 67.3 percent.
• Uptake of new products – Uptake of new, innovative medicines represented just $441 million of total sales in 2007, reflecting both the fewest new product launches in the past three decades and slower adoption by physicians of these products.
• Medicare Part D contribution – Prescriptions dispensed through the Medicare Part D program accounted for 19 percent of retail prescriptions at the end of last year, a modest increase over 2006, and reflective of a maturing program. Today, 65 percent of U.S. citizens age 65 and older are enrolled in the Medicare Part D program.
• Safety issues – Sales growth in 2007 also was affected by a significant number of “black box” warnings and product withdrawals, as well as safety concerns raised by the FDA for products in the erythropoietins, diabetes and antidepressant therapy classes. Safety issues contributed to significantly lower- than-expected sales for products accounting for approximately 10 percent of the total prescription market.